What is the taxability of opening balance as on 1st day of April 2016 of Foreign Currency Translation Reserve (FCTR) relating to non-integral foreign operation, if any, recognised as per Accounting Standards (AS) 11.

Manual - ICDS VI : Effects of Changes in Foreign Exchange Rates

FCTR balance as on 1 April 2016 pertaining to exchange differences on monetary items for non-integral operations, shall be recognised in the previous year relevant for assessment year 2017-18 to the extent not recognised in the income computation in the past.

The correctness of the answer seems debatable as there is no real income that is really earned on the conversion. Further the treatment as prescribed in ICDS VI cannot apply to earlier years where the amount may not be taxable. Hence one will have to take appropriate professional judgment.

Dated: 30-8-2017